IoW in UDI as island activists plan vote to be tax haven

The Isle of Wight is no stranger to the wealthy swagger of the yachtie, the sometimes brash smell of bilge water and new money. But if its politicians have their way, the smell of money may be a permanent fixture.

After freedom calls from Wales and Scotland, the small island, situated only a half-hour ferry ride from Southampton, is likely to make a cry for autonomy of its own, coupled with an audacious push to be recognised as a free port and tax haven.

For seven days of the year, the Isle of Wight becomes the centre of the social calendar, the place where new and old money go to race their yachts, drink their champagne and be seen wearing the right deck shoes.

The rest of the time, despite attracting more than 2m tourists, it suffers depression. It shares the lowest gross domestic product of any county - 3 per cent - with South Glamorgan.

When the tourists go home, it suffers poor transport, a lack of industry and seasonal unemployment of 15 per cent. The national average is less than 8 per cent.

But the islanders may soon take part in a referendum that could result in two demands landing on John Major's desk.

The first, for a rail or tunnel link to the mainland, is controversial - the young entrepreneurs want it, the retired folk don't.

The second was described yesterday as simply crazy.

On 17 July, Morris Barton, the Liberal Democrat leader of the Isle of Wight council, will ask its policy committee to approve a referendum on proposals for a devolved admin- istration with law-making and tax-raising powers.

It would give the island free-port status - effectively making it a duty-free island - and could lead to calls to make it a tax haven like the Channel Islands.

"We feel that this island has been sadly neglected by central Government, and we feel that we could improve things for its population if we were given more control over our destiny," said Mr Barton.

"We would expect to still have links with the British Government, and we would have the Queen as head of state. "But the island could benefit financially if it were made a free port."

In the Channel Islands, residents pay a flat rate of tax at 20 per cent, while non-residents pay nothing. The islands benefit, therefore, by an influx of banks and insurance companies from the employment they bring and from the taxes raised on their employees.

The moves are supported in principal by the Isle of Wight Labour leader Kenn Pearson: "It's a great ideal, but I can't see it happening in my lifetime."

The Tory leader Roy Westmore was more dismissive. "This idea has been bouncing round for 40 years but it's just plain crazy. Who knows? Perhaps Morris Barton would run for President with a generous salary and expenses."

Experts believe the island has no chance of becoming a tax haven. Charles Suchett-Kaye, tax partner with the London law firm Reynolds Porter Chamberlain said: "Jersey, Guernsey and the Isle of Man were once recognised states with their own governments, which they retain. They simply ceded sovereignty to Britain in return for protection.The Isle of Wight is just another part of Britain.

"There is as much chance of me winning the lottery two weeks running as there is of the Isle of Wight becoming a tax haven. No, make that three weeks running."